The 2018/19 oilseeds production forecast for the European Union has been reduced significantly since USDA’s first projections published in May. Although prospects for sunflowerseed have improved, lower rapeseed yields are dragging production below last year.

Additionally, EU wheat and coarse grains crop projections are cut again this month resulting in expected lower feed grains consumption. Reductions in rapeseed and coarse grain supplies can be offset with higher rapeseed and corn imports; reduced availability of feed-quality wheat may be partially offset with imported soybeans and oilseeds meals.

For that reason, 2018/19 soybean and soybean meal import projections are boosted to 15.8 and 18.5 million tons, respectively. Additionally, rapeseed and sunflowerseed meal import forecasts are adjusted higher following improved production prospects for both crops in Ukraine.

Meanwhile, the 2017/18 EU soybean import forecast remains unchanged at 14.1 million tons. Lower U.S. soybean prices vis-à-vis Brazil, a result of China’s duties imposed on U.S.-origin soybeans, have contributed to a surge in EU imports from the United States. While China substitutes U.S. soybeans by maximizing purchases from Brazil, the rest of the world is taking advantage of competitively priced U.S. supplies and the improved crush margins that have resulted.

The recent shift to U.S. origin is likely to continue as long as crush margins remain attractive. However, it is important to note that the European Union is a mature market with limited capacity to expand. According to industry contacts, oilseeds processors are crushing at or near capacity which limits soybean import growth.

In line with this year’s reduced crush, 2018/19 soybean crush is lowered by 1.5 million tons to 95.0 million. USDA forecasts China oilseed meals consumption at 92.3 million tons (soybean meal-equivalent basis), which represents slowing growth in annual consumption at 3.2 percent. This is below last month’s estimate of 3.8 percent.

2017/18 Crush Update:

Large pork supplies that are pressuring prices, along with higher soybean import prices that are eroding crush margins, have significantly slowed soybean processing. As a result, USDA further lowers China’s 2017/18 soybean crush this month to 91.0 million tons. Lower meal output is partially offset with higher fishmeal and sunflowerseed meal imports. In 2017/18, China is projected to consume 89.5 million tons of oilseed meals (soybean meal-equivalent basis), 4.0 percent above last year. This is below last month’s forecast of 4.6 percent annual growth.

2017/18 Import Update:

Between October 2017 and July 2018, China imported nearly 77.0 million tons of soybeans, almost replicating last marketing year. Based on available trade-to-date information, USDA is cutting 2017/18 China soybean imports by 1.0 million tons to 96.0 million. Even though, soybean arrivals in recent months have been below expectations, partly in response to port congestion, USDA still expects robust imports in August and September, mostly Brazilian origin.